Half Yearly Report

28 September 2012

SerVision PLC

("SerVision" or the "Company")

Interim Results

For the Six Months Ended 30 June 2012 

Board of SerVision (AIM: SEV), the AIM listed leading developer and manufacturer of digital security systems, announces its unaudited results for the six months ended 30 June 2012.

Highlights:

·; Revenues for the period increased 3.8% to $2,234,000 (H1 2011 revenue: $2,152,000 for the same period in 2011);

·; Operating loss for the period was $452,000 (H1 2011: operating profit of $576,000);

·; Net loss for the period was $612,100 (H1 2011: net profit of $539,000); and

·; Significant upgrades made to the flagship MVG 400 units

For further information:

CHAIRMAN'S STATEMENT

I am pleased to announce SerVision's consolidated group interim report for the six months ended 30 June, 2012. Our sales revenue during this period was $2,234,000 and our net loss was $612,100.

Sales and Marketing

Despite a relatively modest performance over the first six months of 2012, SerVision's mobile solutions were selected for a range of high-profile projects around the globe. During this period, SerVision's MVG and CVG-M units were purchased for installation in police vehicles in Mexico and Honduras, as well as for delivery trucks carrying high-value assets in South Africa. Multiple ongoing bus projects in Brazil and a recent Safe City project in Buenos Aires also contributed to sales during the period. These projects and others are expected to further bolster sales revenues during the second half of this year. Pilots for a range of vertical markets including trains, tobacco transport, petrochemical vehicles and oil tankers are also expected to yield significant commercial results.

In addition to renewing its strategic partnerships with Guvision in Brazil and Cobra in the UK, SerVision has recently resumed high-level negotiations with Deutsche Telekom for cooperation on homeland security projects. I am also pleased to announce that SerVision is now a partner in a newly launched US-based company called Compass Traffic Safety Solutions. Compass will be delivering SerVision's mobile solutions to school districts to help ensure the safety of children while travelling to and from schools, by reducing traffic violations that occur in the vicinity of school buses. The live, on-board video solution is fully integrated with local municipality databases and automatically generates tickets when negligent driving is detected. Revenue from the tickets will be divided between the local government and Compass.

Research and Development

During the period, SerVision made some significant hardware modifications to its flagship mobile product, the MVG 400, to enable faster data transmission and built-in WiFi support. The built-in WiFi enables automated wireless backup of video to SerVision's SVControlCenter database. In the future, the MVG will be able to be used as an access point to offer to WiFi to passengers. The new four channel version was released to market in June and a new two channel version of the MVG, also with built-in WiFi, is nearly ready for release, with mass production anticipated to commence by the end of Q4. R&D also implemented many new features and optimizations to SerVision's Video Distributor and the enterprise-level SVControlCenter, expanding the capabilities and efficiency of both solutions. The SV monitoring center can support up to 5,000 systems and the Directors believe it will enable SerVision to win larger contracts and give the Company the opportunity to receive recurring revenues from customers using the system.

In parallel to continuously improving SerVision's existing portfolio, progress is being made on development of a new range of products operating on a more advanced hardware platform. The new line of DVRs, stated for release in 2013, will offer all of the existing features of the existing mobile solutions but with more efficient processing of video and enhanced recording quality. Development has also begun on a new, highly ruggedized and compact personal video transmitter device for carry-on-body security applications.

Financials

·; Revenues for this period were $2,234,000 compared to $2,152,000 for the same period in 2011.  

·; Operating loss for the period was $452,000 compared to an operating profit of $576,000 for the same period in 2011. The operating profit from 2011 resulted from a Change in Estimate of a liability to the Chief Scientist. As a result, the Company's net profit for last year's period increased by an amount of $761,000.

·; Net loss for the period was $612,000 compared to a profit of $539,000 for the same period in 2011.

Conclusion

Despite the slow start to this year, I am optimistic about our overall performance for 2012 and anticipate a significant improvement in the second half of the year. However results for the full year 2012 are likely to be behind market expectations. Notwithstanding this, our pipeline for new and existing projects is very promising and I remain confident that the future prospects of the Company are positive.

As always, I want to thank our shareholders for their support and I'd like to convey my gratitude to all SerVision personnel for their hard work and contribution to the company's success.

Gidon Tahan,

Chairman and CEO

SERVISION PLC

CONDENSED GROUP COMPREHENSIVE INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

SERVISION PLC

CONDENSED GROUP BALANCE SHEET

AT 30 JUNE 2012

SERVISION PLC

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2012

SERVISION PLC

CONDENSED GROUP CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

SERVISION PLC

NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2012

1. BASIS OF PREPARATION

The condensed group financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as endorsed for use by Companies listed on an EU regulated market and in accordance with IAS34 - "Interim Financial Reporting". The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Group's latest annual audited financial statements. It is not expected that there will be any changes or additions to these in the 2012 annual financial statements.

This statement does not comprise statutory accounts as defined in Section 434 of the Companies Act 2006 and the results for the six months ended 30 June 2012 and for the six months ended 30 June 2011 are unaudited.

The financial information for the year ended 31 December 2011 is an extract from the latest group accounts.

Statutory financial statements for the year ended 31 December 2011, prepared in accordance with IFRS, on which the auditors gave an unqualified opinion, have been filed with the Registrar of Companies.

These consolidated interim group financial statements are presented in US Dollars and all values are rounded to the nearest thousand dollars ($'000) except when otherwise indicated.

2. GOING CONCERN

The directors have prepared and reviewed sales forecasts and budgets for the next twelve months and having considered these cash flows and the availability of other financing sources, have concluded that the group will remain a going concern. In particular as noted in Note 7 the group has put in place payment plans with customers in order to secure cash flows and reduce the outstanding trade receivables balances. Additionally If and when necessary, the Directors may seek additional equity investment.

Having completed these processes and having made further relevant enquiries, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

3. BUSINESS SEGMENT ANALYSIS

Class of business

The turnover, loss on ordinary activities before taxation and net assets of the Group are attributable to one class of business, that of developing and selling video surveillance equipment.

Geographical areas

4. TAXATION

The Company is controlled and managed by its Board in Israel. Accordingly, the interaction of UK domestic tax rules and the taxation agreement entered into between the U.K. and Israel operate so as to treat the Company as solely resident for tax purposes in Israel. The Company undertakes no business activity in the UK such as might result in a Permanent Establishment for tax purposes and accordingly has no liability to UK corporation tax.

5. LOSS PER SHARE

The profit (loss) per share of (1.20c) (31 December 2011: profit 2.57c; 30 June 2011: profit 1.13c) has been calculated on the weighted average number of shares in issue during the year namely 51,188,602 (31 December 2011: 49,678,185; 30 June 2011: 48,167,769) and loss of US$ 612,200 (31 December 2011: profit US$ 1,278,000; 30 June 2011: profit US$ 545,690).

Due to the immaterial number of options in issue there is no material difference between the diluted and basic loss per share.

6. CHANGE IN ACCOUNTING ESTIMATE

During 2002 - 2005 the subsidiary companyreceived grants totalling $864,000 from the Office of the Chief Scientist which financed a portion of the research and development expenses of the SVG system ("the System") previously developed by the subsidiary company.

Repayment of the grants is dependent on sales of the System and is carried out through the payment of royalties to the Chief Scientist, based on a percentage of the sales of the System.

Through December 31, 2010, subsidiary company management considered that it would market the System for a number of years and accordingly recorded the liability to the Chief Scientist, including interest at the LIBOR rate, of $936,000.

Following development of new systems with more advanced technology and in light of the significant reduction in demand for the System, during the current period, the subsidiary company management decided to market the System only until the end of 2013 ("the Change in Estimate") and accordingly the remainder of the royalties which the subsidiary company will have to pay, including the expected sales through and including 2013, amounts to $175,000.

As a result of the Change in Estimate, as of June 30, 2011 the subsidiary company reduced the balance of the liability to the Chief Scientist by an amount of $761,000, presented as other income in the Statement of Comprehensive Income.

As a result of the Change in Estimate the subsidiary company's net profit during that reporting period increased by an amount of $761,000. The balance of the liability was reduced by a further $5,000in the period from 1 July 2011 to 31 December 2011.

7. ARRANGMENT FOR LONG-TERM RECEIVABLE

Due to financing difficulties of four customers of the subsidiary company (the "Customers") who were unable to pay their debts to the Company at the agreed dates, the company agreed to extend the dates of payment of the debts to the Company for a period of 24 months from September 2012. The Company has agreed not to charge interest on the outstanding balances.

Trade receivables from the Customers for prior year sales are presented with trade receivables at the present value of the outstanding balance as at the Balance Sheet date. The differences between the balances recorded in two consecutive Balance Sheets are recorded as financing expenses in the Comprehensive Income Statement.

INDEPENDENT REVIEW REPORT TO SERVISION PLC

Introduction

We have been engaged by the company to review the condensed set of group financial statements in the interim report for the six months ended 30 June 2012 which comprises the Group Income Statement, the Group Balance Sheet, the Group Cash Flow Statement, the Group Statement of Changes in Equity and related explanatory notes 1 to 7. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. As disclosed in note 1, the annual financial statements of Servision Plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting,'' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Group a conclusion on the condensed set of group financial statements in the interim report based on our review.

Our report has been prepared in accordance with the terms of our engagement and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Emphasis of matter - going concern

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made within the accounting policies concerning the Group's ability to continue as a going concern. The Group incurred a net loss of $612,000 during the six months ended 30 June 2012. This along with other matters disclosed in note 2 may indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The interim financial statements do not include the adjustments that would result of the Group was unable to continue as a going concern.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of group financial statements in the interim report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union.

haysmacintyre Fairfax House

Chartered Accountants 15 Fulwood Place

Registered Auditors London

WC1V 6AY